This year has been a busy one for real estate, but that trend will reverse course as we head into fall. A real estate slowdown this time of year is normal, of course. But this year in particular saw such huge numbers of sales during the spring and summer that we have had a large enough drop in inventory that there may not be enough homes to meet the buyer demand this fall.
The Washington metro area began the 2016 real estate season with about 700 more homes on the market compared to the year before — a first-quarter total of 9,744 listings vs. 9,015 (or approximately an 8 percent increase) and each of the early spring months continued to add even more new listings to the market. However, buyer activity was so strong during the spring and summer that we are entering the fall with a 16 percent lower volume of inventory compared to last year.
When we looked back to September 2015, there were almost 13,000 homes for sale. But at the end of August 2016, there were just over 10,000 active listings on the market. While that is better than those very lean years when we saw the number of active listings decrease to about 6,000, it still suggests the likelihood of a slowdown in activity while buyers wait for more homes to come on the market next spring. All this activity earlier in the year means that so far in 2016, the total volume of homes sold is 7 percent higher than the same time last year for the Washington region and 5.3 percent higher in the District.
As one would expect, the strong demand for homes helped drive up sale prices, making some of this year’s prices the highest on record. Within the District, the January through August year-to-date median sold price reached $545,000. When we add the suburbs into the mix, the median price comes to $417,000. Surprisingly, the median price for the District increased in August, topping $575,000 making it the highest on record. Since prices don’t usually go up in August, this might indicate buyer demand is so strong that homes will continue to be snatched up even though there aren’t as many to choose from.
Part of this surge in demand was driven by the rush to close on a home resulting from the threat of interest rates going up. Now that the Federal Reserve has decided to defer any increase until December at the earliest, my guess is that buyers won’t feel as much pressure to purchase as quickly. Despite the busy summer, I’m still going to give a slight preference to my prediction for a seasonal slowdown.
Of course, the upcoming election is on everyone’s mind, but this rarely has the deep impact that those outside the Beltway often perceive it does. Anyone who is going to undergo a job change because of a new administration has months of warning that it is going to happen, as do the new employees who are hired from outside the area. The consequential impact on the local real estate market takes place over such a long period of time that we are unlikely to see any major spikes on either the buyer or seller sides.
So far, 2016 has been the best year for real estate since the housing crisis. More new listings have gone on the market and more have gotten snatched up. Even though prices are increasing, the good news is this is the time of year when sellers are more open to negotiation as the busy summer has come to an end. If you are still looking to buy a home, don’t rule out finding one that fits your budget before the end of the year.